The commercial side of the floor covering business is finally starting to move nicely, according to results of the just-completed Market Trends Study. This month's portion of the study of specialty retailers reviews the various commercial product segments along with business investment and trends. Last month, the article covered the residential market.

Our panelists project future growth in the commercial segment with increases from 13% in rubber floors; stone, 17%; vinyl, 14%; laminate floors, 15%; wood, 17%; carpet, 19%; and ceramic tile, 18%.

According to the respondents, computers/software will be the top area of increased investment planned within the next two years at 57% (multiple responses allowed), followed by showroom design; and training and education at 51% each; marketing and advertising, 41%; sales staff personnel, 40%; trucks/vans, 34%; communications equipment, 31%; in-house installation services, 20%; and none of the above, 5%. (Chart 1)

Forty-six percent of our survey group rated the residential replacement segment the fastest growing part of their business, followed by builder/new construction, 27%; contract/commercial, 14%; main street commercial, 4%; none/no growth, 6%; and other, 3%. (Chart 2)

Retailer sales combining residential and commercial products are expected to increase by 15% in 2005, reported by 75% of respondents. Just 4% of respondents expect decreased sales. (Chart 3)

Flooring sales for our group were divided as follows: residential replacement, 48%; builder/new construction, 24%; contract/commercial, 19%; and main street commercial, 9%. (Chart 4.) Seventy percent of the survey participants tallied 2004 gross annual sales of $1 million plus.

The demand for environmentally-friendly flooring products is mixed at this time with the "yes" respondents tallying 52%, compared to 48% for those retailers not seeing a trend toward green products.

Editor's Note: National Floor Trends commissioned another in our ongoing series of market studies to help flooring retailers/contractors enhance the success and profitability of their businesses. Identifying current product/sales trends and projecting the industry's future direction is imperative to making strategic decisions that ensure growth and prosperity.

Our 2005 Market Trends Study is based upon responses from a sample of 1,500 active, qualified flooring dealers/contractors selected on an Nth name basis from the domestic circulation list of NFT subscribers. A 23% response rate by specialty retailers provides the data for this study. The study was designed and conducted by the market research division of BNP Media in conjunction with the editorial staff of National Floor Trends.

The complete 2005 Market Trends Study is available for $295 each and $275 for multiple copies.